Britain's proportion of unemployed 16-24-year-olds rose to 16.1% in the final quarter of last year, official figures show, marking the highest level in a decade and prompting fresh questions about a government plan to remove lower minimum wage rates for younger workers. That rate compares with 13.8% at the mid-point of 2025 and a pandemic-era low below 9.2%.
The jump in youth unemployment now places Britain above the euro zone on this measure and has opened a debate among policymakers, employers and economists over whether recent policy choices have damaged opportunities for younger workers.
Where the evidence points
Several business groups and economists attribute at least part of the deterioration to a confluence of policy and cost pressures. They single out a marked rise in the minimum wage over recent years together with the increase in employer social security charges that took effect last April, and broader economic headwinds that have weakened hiring overall. By contrast, the role of greater adoption of artificial intelligence in driving job losses is described by some analysts as harder to establish.
Jack Kennedy, senior economist at job site Indeed, said the composition of vacancies in Britain has shifted in a way that stands out compared with other major European economies. He noted that job postings for roles paying close to the minimum wage have declined more sharply than those for higher-paid positions over the past three years - a pattern he described as the opposite of Germany and France.
"The UK really stands out in terms of the weakening that we’ve seen in lower-paid job postings," Kennedy said. "That does definitely illustrate the extent to which low-wage postings in the UK have been hit by policy changes: the National Insurance increase, the minimum wage increases, and so forth."
Ben Caswell, senior economist at the National Institute of Economic and Social Research, draws on official data showing that some of the sharpest unemployment rises in the private sector between April and October 2025 occurred in hospitality and retail.
"It’s definitely impacting younger workers more," Caswell said, while adding that the IT sector had also seen above-average job losses, possibly linked to AI. He cautioned that overall there was little evidence of firms broadly investing in labour-saving technology in response to higher labour costs.
Minimum wage trajectory and policy intent
For much of the period since Britain introduced a minimum wage in 1999, there was limited evidence that it depressed employment. The headline unemployment rate for the wider workforce reached a post-1970s low of 3.6% in 2022. Under the previous Conservative government, an explicit objective was set to raise the main minimum wage to two thirds of median earnings, bringing the UK to one of the highest relative positions in Europe.
Policy changes over recent years have also narrowed age-based differentials. Lower minimum wage rates for 23-24-year-olds were abolished in 2021 and similar reductions for 21-22-year-olds were removed in 2024. The current government has committed to ending lower pay rates for 18-20-year-olds as well.
The primary minimum wage now stands at 12.21 pounds an hour - equivalent to $16.40 - and has increased 29% over the past three years. The rate for 18 to 20-year-old workers has risen 46% over the same period to 10 pounds an hour and is set to rise to 10.85 pounds in April.
Approaches to youth rates vary across Europe. The article's data notes that France, which has a minimum wage level broadly comparable to Britain's, generally does not apply lower rates by age outside specific training arrangements, while the Netherlands sets a substantially lower hourly rate for 18-year-olds than for those three years older.
Employer responses and apprenticeship concerns
Evidence from employers suggests a shift in hiring incentives, particularly among smaller manufacturers and engineering firms that take on apprentices. Gareth Jones, managing director of In-Comm Training Services, said these companies are increasingly hesitant to recruit apprentices because the relative cost of hiring an unskilled entrant approaches that of bringing on semi-skilled staff.
"There’s a lot of narrative around employers saying: 'Why would we pay someone that’s completely unskilled that wage when we can get semi-skilled for the same or not too much more?'" Jones said.
The result is a tougher market for job-seekers aged in their late teens and early twenties. For many, work is part-time and must fit around study commitments, which limits available roles.
Alex Kelly, a 19-year-old film student, works behind the bar at a working men's club in southeast London but reports erratic hours and difficulty finding additional employment that accommodates his studies. "The applying process is really awful. If you do it online, then most of the time you’re not even getting a response," he said. "A lot of people I know have just stopped applying for jobs."
Similarly, Elsa Torres, 20 and in her final year of a business studies degree in Liverpool, said she has been unable to secure a part-time role despite submitting 70 applications after the gastropub where she worked closed down.
Political pressure and policy reconsideration
The reported deterioration in the youth labour market has reportedly prompted the government to weigh whether to proceed with its long-term plan to eliminate the lower pay band for 18-20-year-olds. A government spokesperson reiterated that the minimum wage is rising "so that low-paid workers are properly rewarded." Formal minimum wage rates for 2027 will be set in October or November following advice from a public body that represents businesses, academics and trade unions.
Nye Cominetti, an economist at the Resolution Foundation, said the evidence that higher minimum wages are to blame for rising youth unemployment is not conclusive but is sufficiently persuasive to counsel caution on future large increases in youth rates.
"In a world where the youth labour market looks rocky ... big increases in the youth minimum wage rate are probably the wrong way to go," Cominetti said.
Uncertainties that remain
While several factors line up as plausible contributors to the spike in youth unemployment - larger minimum wage increases, higher employer social security charges and weak demand - the balance of causes is not definitively settled. The extent to which firms are adopting labour-saving technologies in response to higher wages remains contested. Similarly, the ultimate policy path - whether the government will press ahead with abolishing the lower rate for 18-20-year-olds or step back - is a live question that depends on forthcoming data and political judgment.
($1 = 0.7428 pounds)